What the position size calculator does
Position sizing answers one question before every trade: how large can this position be so that, if the stop-loss is hit, you lose only the amount you decided in advance? The calculator works backwards from your risk budget and your stop distance, instead of picking a lot size first and hoping the stop fits.
How to use it
- Enter your account balance in US dollars.
- Choose how you express risk: a percentage of the balance or a fixed dollar amount.
- Type the stop-loss distance in pips (points for indices and crypto), measured from your entry to your stop — not from the current price.
- Pick the instrument. For pairs whose quote currency is not the dollar (USD/JPY, EUR/GBP…), enter the current conversion rate. For indices, enter what one point is worth per lot at your broker, because it varies.
The result shows the size in standard lots, plus the same exposure in mini lots, micro lots and units. Brokers trade in 0.01-lot steps, so the headline figure is rounded down to keep you inside your risk.
The formula
risk amount = balance × risk % (or your fixed amount)
pip value (1 lot) = pip size × contract size, converted to USD
lots = risk amount ÷ (stop in pips × pip value per lot)
On pairs quoted in dollars, one pip on one standard lot (100,000 units) is worth $10. On USD/JPY a pip is worth ¥1,000 per lot, so you divide by the USD/JPY price. Gold uses 100 ounces per lot and a 0.1 pip, which also gives $10 per pip.
Worked example
A $10,000 account risking 1% has a $100 budget. On EUR/USD with a 20-pip stop: 100 ÷ (20 × $10) = 0.50 lots — 5 mini lots, 50 micro lots or 50,000 units.
The same account on USD/JPY at 150.00 with a 25-pip stop: one pip on one lot is ¥1,000 ÷ 150 = $6.67, so 100 ÷ (25 × 6.67) = 0.60 lots.
On gold, a $5.00 stop is 50 pips: 100 ÷ (50 × $10) = 0.20 lots.
Common mistakes
- Sizing first, placing the stop second. A stop placed where the size "allows" ignores market structure. Choose the stop from the chart, then let the size adapt.
- Forgetting spread and commission. A 20-pip stop with a 1.5-pip spread effectively costs 21.5 pips. Leave a buffer on volatile instruments.
- Using the wrong pip value. Non-USD quote currencies, gold and indices do not pay $10 per pip. Check your broker's contract specification.
- Rounding up. If the exact size is 0.537 lots, trade 0.53, not 0.54.
- Raising risk after a loss. A fixed percentage shrinks positions during a drawdown, which is exactly the protection you want. See how streaks add up with the drawdown calculator.